Huawei to capitalise on African growth

A Huawei Ascend P1 smartphone. The company expects revenue in east and southern Africa to grow by as much as 30 percent in the next three years following strong growth. Photo: Reuters

Eric Ombok Nairobi

HUAWEI Technologies’ revenue in southern and east Africa might climb as much as 30 percent in the next three years as growth on the continent outpaced most regions, the company said yesterday.

The Chinese phone equipment manufacturer planned to capitalise on low cellular-broadband penetration rates and increasing demand for smartphones in Africa, said Li Dafeng, the president for east and southern Africa.

Huawei, based in Shenzhen, would also focus on developing its enterprise business that supplied equipment to governments and companies, he said.

Africa has less than five cellular-broadband subscriptions per 100 inhabitants, compared with more than 10 percent in the rest of the world, according to the Geneva-based industry group International Telecommunications Union.

Over the next five years, the continent was expected to be the fastest-growing region in terms of cellphone connections, the Chicago-based consultancy AT Kearney said.

“There is still much room to grow, so we can see that in the next three years network availability will be improved greatly,” Huawei chief technology officer for east and southern Africa Radoslaw Kedzia said. “This is why we can grow 20 percent to 30 percent.”

Economic growth in sub-Saharan Africa is expected to accelerate to 5.7 percent next year from 5 percent this year, outpacing every other region except developing Asia, the International Monetary Fund (IMF) said last month.

Huawei’s southern and east African business comprises 25 countries including South Africa, Angola and Kenya.

The company posted revenue for the entire African region of $3.42 billion (R30.1bn) last year, up 15 percent from 2010 , Li said.

Total sales accounted for 13 percent of global sales, the company said in a statement.

“If you look at the penetration of cellular broadband compared to European countries or compared with China, there is a lot of potential,” Li said.

“In my region, the penetration of smartphones is 10 percent. In China, cellular broadband penetration is 30 percent, in Europe it is more than 50 percent and it is 16 percent in Kenya. So there is still a lot of potential.”

Nigeria, Africa’s most populous nation, was Huawei’s biggest market for its carrier division on the continent, which supplied equipment to cellphone companies, Kedzia added.

In South Africa, the continent’s largest economy, which contributes 30 percent of the company’s African revenue, Huawei was planning to grow market share as the country was seeking to achieve 100 percent broadband penetration by 2020, Li said.

Huawei sold 20 million smartphones globally last year and estimates it will sell another 60 million units this year, earning revenue of $9bn.

“Huawei’s Ideos, the first under-$100 smartphone, has become popular in the region, gaining a market share of 45 percent in Kenya,” Li said. “We have sold 250 000 pieces since its launch last year.”

The US Congress last month said Huawei and ZTE, China’s second-biggest telephone equipment manufacturer, provided opportunities for Chinese intelligence services to tamper with US telecoms networks for spying.

A report by the House intelligence committee report said the companies failed to explain their relationship with the Chinese government. Li rejected the criticism.

“Huawei is just a telecommunications manufacturer, we have no link with government,” Li said. “The only relationship between Huawei and the government is the business. We provide some solutions, some products, this is the only relationship.”

Huawei’s customers in east and southern Africa include South Africa’s five cellular operators, including Vodacom and MTN.

Other clients are Angola’s Unitel and Movicel Telecomunicações and Safaricom of Kenya, east Africa’s biggest cellular operator.

The company has a research and development centre in South Africa and seven training facilities in the region, including the Democratic Republic of the Congo, Egypt and Morocco.